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Executive Paywatch: High Paid CEOs and the Low-Wage Economy

April 23, 2014 Comments off

Executive Paywatch: High Paid CEOs and the Low-Wage Economy
Source: AFL-CIO

In 2013 the CEO to worker pay ratio was 331:1 and the CEO to minimum wage worker pay ratio was 774:1. America is supposed to be the land of opportunity, a country where hard work and playing by the rules would provide working families a middle-class standard of living. But in recent decades, corporate CEOs have been taking a greater share of the economic pie while wages have stagnated and unemployment remains high.

High-paid CEOs of low-wage employers are fueling this growing economic inequality. In 2013, CEOs of the Standard & Poor’s (S&P) 500 Index companies received, on average, $11.7 million in total compensation, according to the AFL-CIO’s analysis of available data from 350 companies.

Today’s ratio of CEO-to-worker pay is simply unconscionable. While CEO pay remains in the stratosphere, production and nonsupervisory workers took home only $35,239 on average in 2013, and a full-time worker making the federal minimum wage earned only $15,080.

Even as companies argue that they can’t afford to raise wages, the nation’s largest companies are earning higher profits per employee than they did five years ago. In 2013, the S&P 500 Index companies earned $41,249 in profits per employee, a 38% increase.

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Job Tasks, Computer Use, and the Decreasing Part-Time Pay Penalty for Women in the UK

April 23, 2014 Comments off

Job Tasks, Computer Use, and the Decreasing Part-Time Pay Penalty for Women in the UK (PDF)
Source: Institute for the Study of Labor

Using data from the UK Skills Surveys, we show that the part-time pay penalty for female workers within low- and medium-skilled occupations decreased significantly over the period 1997-2006. The convergence in computer use between part-time and full-time workers within these occupations explains a large share of the decrease in the part-time pay penalty. However, the lower part-time pay penalty is also related to lower wage returns to reading and writing which are performed more intensively by full-time workers. Conversely, the increasing returns to influencing has increased the part-time pay penalty despite the convergence in the influencing task input between part-time and full-time workers. The relative changes in the input and prices of computer use and job tasks together explain more than 50 percent of the decrease in the part-time pay penalty.

I Used to Work at Goldman Sachs! How Firms Benefit From Organizational Status in the Market for Human Capital

April 21, 2014 Comments off

I Used to Work at Goldman Sachs! How Firms Benefit From Organizational Status in the Market for Human Capital (PDF)
Source: Strategic Management Journal (forthcoming)

How does employer status benefit firms in the market for general human capital? On the one hand, high status employers are better able to attract workers, who value the signal of ability that employment at those firms provides. On the other hand, that same signal can help workers bid up wages and capture the value of employers’ status. Exploring this tension, we argue that high status firms are able to hire higher ability workers than other firms, and do not need to pay them the full value of their ability early in the career, but must raise wages more rapidly than other firms as those workers accrue experience. We test our arguments using unique survey data on careers in investment banking.

See: The Hiring Advantage of High-status Firms (Knowledge@Wharton)

Perspectives on Health Care Spending Growth

April 16, 2014 Comments off

Perspectives on Health Care Spending Growth
Source: Brookings Institution

The evolution of health care spending has important implications for many aspects of our economy. As highlighted by this conference, the trajectory of health spending growth is a central determinant of the outlook for federal and state budgets and for workers’ take-home pay. Health spending also affects other key economic variables, including measured productivity and prices. Further, the coming demographic change has important implications for both the level and financing of health spending. For these reasons, the question of what drives health spending growth is a subject that has received much attention from researchers and policymakers, although, as I hope to show in this background paper, much remains to be learned.

Is Violent Radicalisation Associated with Poverty, Migration, Poor Self-Reported Health and Common Mental Disorders?

April 14, 2014 Comments off

Is Violent Radicalisation Associated with Poverty, Migration, Poor Self-Reported Health and Common Mental Disorders?
Source: PLoS ONE

Background
Doctors, lawyers and criminal justice agencies need methods to assess vulnerability to violent radicalization. In synergy, public health interventions aim to prevent the emergence of risk behaviours as well as prevent and treat new illness events. This paper describes a new method of assessing vulnerability to violent radicalization, and then investigates the role of previously reported causes, including poor self-reported health, anxiety and depression, adverse life events, poverty, and migration and socio-political factors. The aim is to identify foci for preventive intervention.

Methods
A cross-sectional survey of a representative population sample of men and women aged 18–45, of Muslim heritage and recruited by quota sampling by age, gender, working status, in two English cities. The main outcomes include self-reported health, symptoms of anxiety and depression (common mental disorders), and vulnerability to violent radicalization assessed by sympathies for violent protest and terrorist acts.

Results
2.4% of people showed some sympathy for violent protest and terrorist acts. Sympathy was more likely to be articulated by the under 20s, those in full time education rather than employment, those born in the UK, those speaking English at home, and high earners (>£75,000 a year). People with poor self-reported health were less likely to show sympathies for violent protest and terrorism. Anxiety and depressive symptoms, adverse life events and socio-political attitudes showed no associations.

Conclusions
Sympathies for violent protest and terrorism were uncommon among men and women, aged 18–45, of Muslim heritage living in two English cities. Youth, wealth, and being in education rather than employment were risk factors.

New Report Documents That Liberal Arts Disciplines Prepare Graduates for Long-Term Professional Success

April 10, 2014 Comments off

New Report Documents That Liberal Arts Disciplines Prepare Graduates for Long-Term Professional Success
Source: Association of American Colleges and Universities (AAC&U) and the National Center for Higher Education Management Systems (NCHEMS)

The Association of American Colleges and Universities (AAC&U) and the National Center for Higher Education Management Systems (NCHEMS) released today a new report on earnings and long-term career paths for college graduates with different undergraduate majors. In How Liberal Arts and Sciences Majors Fare in Employment, authors Debra Humphreys and Patrick Kelly analyze data from the 2010-11 US Census Bureau’s American Community Survey and provide answers to some common questions posed by students, parents, and policy makers who are increasingly concerned about the value of college degrees.

Responding to concerns about whether college is still worth it and whether liberal arts majors provide a solid foundation for long-term employment and career success, the report compares earnings trajectories and career pathways for liberal arts majors with the earnings trajectories and career pathways for those majoring in science and mathematics, engineering, and professional or preprofessional fields like business or education.

“Recent attacks on the liberal arts by ill-informed commentators and policy makers have painted a misleading picture of the value of the liberal arts to individuals and our communities,” said AAC&U President Carol Geary Schneider. “As the findings in this report demonstrate, majoring in a liberal arts field can and does lead to successful and remunerative careers in a wide array of professions.”

Occupational Employment and Wages — May 2013 (released 4/1/14)

April 9, 2014 Comments off

Occupational Employment and Wages — May 2013
Source: Bureau of Labor Statistics

Retail salespersons and cashiers were the occupations with the largest employment in May 2013, the U.S. Bureau of Labor Statistics reported today. These two occupations combined made up nearly 6 percent of total U.S. employment, with employment levels of 4.5 million and 3.3 million, respectively. National employment and wage information for all occupations is shown in table 1.

The data in this release are from the Occupational Employment Statistics (OES) program, which provides employment and wage estimates by area and by industry for wage and salary workers in 22 major occupational groups, 94 minor occupational groups, 458 broad occupations, and 821 detailed occupations.

2014 Sales Compensation Trends Survey© — Executive Summary — January 2014 Survey

April 8, 2014 Comments off

2014 Sales Compensation Trends Survey© — Executive Summary — January 2014 Survey (PDF)
Source: Alexander Group

Sales departments increased sales volume 6% in 2012. Although this was the same increase for 2012, it was below the anticipated 8.4% planned for 2013. Meanwhile, sales leaders expect sales revenue growth of 8% in 2014.

Sales personnel saw their compensation increase by 5% in 2013; however, this 5% growth for 2013 was above the planned 3% growth for 2013.

Academe — Losing Focus: The Annual Report on the Economic Status of the Profession, 2013-14

April 8, 2014 Comments off

Losing Focus: The Annual Report on the Economic Status of the Profession, 2013-14
Source: American Association of University Professors

In the decades following World War II, higher education in the United States has evolved from a narrow concern for a few scholars into an institution that affects all aspects of our society. Nearly every American has either attended college or has a friend or a family member who has enrolled, and many people also follow college sports or have a college or university in their communities. In short, higher education is a central social institution in contemporary America.

And yet, even as colleges and universities have become the focus of increased attention from the general public and policy makers alike, these institutions themselves seem to have lost their focus on a mission of preparing an informed citizenry for participation in democracy and expanding knowledge for the benefit of all. Without a doubt, higher education still provides a transformative experience for the millions of individuals who take part in its many activities. Behind the scenes, however, American higher education is changing in ways that detract from its potential to enhance the common good. This report will endeavor to wipe away some of the clouds obscuring a clear focus on the vital core mission of higher education.

Fact Sheet: Hunger by the Numbers in the African-American Community: Employment, Wages, and Fairness

April 4, 2014 Comments off

Fact Sheet: Hunger by the Numbers in the African-American Community: Employment, Wages, and Fairness (PDF)
Source: Bread for the World

Ending hunger in America is possible. However, the return of income inequality on a scale that hasn’t been witnessed since the Great Depression—and the high poverty and hunger rates that accompany it—indicates that it’s time for the U.S. government to step up.

In 2012, the average incomes of the top 1 percent of households rose by 19.6 percent, while the incomes of the other 99 percent grew by just 1 percent. Economic inequality manifests itself in disproportionate rates of hunger and poverty among communities of color and children in particular. Following is an analysis of hunger and poverty within the African-American community and the connection to employment, wages, and fairness.

SSA OIG — Audit Report: Improper Use of Children’s Social Security Numbers

April 3, 2014 Comments off

Audit Report: Improper Use of Children’s Social Security Numbers
Source: Social Security Administration, Office of Inspector General

As part of the Annual Wage Reporting process, the Social Security Administration (SSA) verifies the names and SSNs on Wage and Tax Statements (Form W-2) to ensure the reported name and SSN is accurate before SSA posts the information from the W-2 to the Master Earnings File. When SSA’s data indicate a wage earner is a child age 6 or younger, SSA places the earnings in the Earnings Suspense File (ESF), a repository for unmatched wage items, and assigns a Young Children’s Earnings (YCER) indicator. SSA mails notices to employers and employees to confirm the children legitimately earned the wages. However, SSA does not have a process for children between ages 7 and 13. SSA posts these children’s wages to their earnings records.

In addition, if the data include a date of death, SSA places in the ESF all the earnings reported after the year of death and assigns an Earnings After Death indicator. SSA sends notices to the employers and employees to confirm employment.

The purpose of this audit was to determine whether employees were improperly using children’s SSNs for work purposes.

Hourly labour costs ranged from €3.7 to €40.1 across the EU28 Member States in 2013

April 1, 2014 Comments off

Hourly labour costs ranged from €3.7 to €40.1 across the EU28 Member States in 2013 (PDF)
Source: Eurostat

In 2013, average hourly labour costs in the whole economy (excluding agriculture and public administration) were estimated to be €23.7 in the EU283 and €28.4 in the euro area (EA17). However, this average masks significant differences between EU Member States, with the lowest hourly labour costs recorded in Bulgaria (€3.7), Romania (€4.6), Lithuania (€6.2) and Latvia (€6.3), and the highest in Sweden (€40.1), Denmark (€38.4), Belgium (€38.0), Luxembourg (€35.7) and France (€34.3).

Are the Long-Term Unemployed on the Margins of the Labor Market?

April 1, 2014 Comments off

Are the Long-Term Unemployed on the Margins of the Labor Market?
Source: Brookings Institution

The short-term unemployment rate is a much stronger predictor of inflation and real wage growth than the overall unemployment rate in the U.S. Even in good times, the long-term unemployed are on the margins of the labor market, with diminished job prospects and high labor force withdrawal rates, and as a result they exert little pressure on wage growth or inflation.

CRS — Selected Characteristics of Private and Public Sector Workers

April 1, 2014 Comments off

Selected Characteristics of Private and Public Sector Workers (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

An issue for Congress and state and local governments is whether the pay and benefits of public workers are comparable to those of workers in the private sector. In addition, among the ways to reduce budget deficits, policy makers are considering the pay and benefits of public sector employees.

The number of people employed in both the private and public sectors has increased steadily as the U.S. economy has grown. However, after increasing to 19.2% of total employment in 1975, the percentage of all jobs that are in the public sector fell to 15.7% in 1999. In 2013, public sector jobs accounted for 16.0% of total employment.

CRS — The U.S. Science and Engineering Workforce: Recent, Current, and Projected Employment, Wages, and Unemployment

March 28, 2014 Comments off

The U.S. Science and Engineering Workforce: Recent, Current, and Projected Employment, Wages, and Unemployment (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

In 2012, there were 6.2 million scientists and engineers (as defined in this report) employed in the United States, accounting for 4.8% of total U.S. employment. Science and engineering employment was concentrated in two S&E occupational groups, computer occupations (56%) and engineers (25%), with the rest accounted for by S&E managers (9%), physical scientists (4%), life scientists (4%), and those in mathematical occupations (2%). From 2008 to 2012, S&E employment increased by 352,370, a compound annual growth rate (CAGR) of 1.5%, while overall U.S. employment contracted at 0.9% CAGR. Viewed only in aggregate, the increase in S&E employment masks the varied degrees of growth and decline in detailed S&E occupations.

In 2012, the mean wage for all scientists and engineers was $87,330, while the mean wage for all other occupations was $45,790. Between 2008 and 2012, the nominal mean wages of the S&E occupational groups grew between 1.4% CAGR (life scientists) and 2.2% CAGR (physical scientists, S&E managers, mathematicians). Inflation-adjusted wage growth for each of the S&E occupational groups was less than 0.6% CAGR, and in the case of life scientists was negative. Nominal wage growth for all occupations in the economy was 1.1%; real wages declined 0.5%.

UK — Review Body on Doctors’ and Dentists’ Remuneration 42nd report: 2014

March 26, 2014 Comments off

Review Body on Doctors’ and Dentists’ Remuneration 42nd report: 2014
Source: Review Body on Doctors’ and Dentists’ Remuneration, Department of Health and Office of Manpower Economics

This report sets out the DDRB analysis of evidence given by relevant organisations and makes proposals on doctors and dentists’ pay from April 2014.

Unique Surveys Show Cash Incentives Prevalent Across Publicly-Traded, Privately-Held and Nonprofit Sectors

March 20, 2014 Comments off

Unique Surveys Show Cash Incentives Prevalent Across Publicly-Traded, Privately-Held and Nonprofit Sectors
Source: WorldatWork, Deloitte, Vivient Consulting

Research released today by WorldatWork, in conjunction with both Deloitte Consulting and Vivient Consulting, shows that a vast majority of organizations use and rely on incentive-based pay practices to compete for top talent, as well as to motivate and reward employees.

For the first time, short and long-term incentive pay practices can be compared directly across the three sectors of publicly-traded firms, privately-held companies and nonprofit/government organizations. Deloitte and Vivient used several identical questions in the three versions of the surveys. This unique research fills a gap that exists in the marketplace for incentive-pay data, especially for non-publicly traded companies.

Are Top Executives Paid Enough? An Evidence-Based Review

March 19, 2014 Comments off

Are Top Executives Paid Enough? An Evidence-Based Review (PDF)
Source: Wharton School, University of Pennsylvania

Our review of the evidence found that the notion that higher pay leads to the selection of better executives is undermined by the prevalence of poor recruiting methods. Moreover, higher pay fails to promote better performance. Instead, it undermines the intrinsic motivation of executives, inhibits their learning, leads them to ignore other stakeholders, and discourages them from considering the long-term effects of their decisions on stakeholders. Relating incentive payments to executives’ actions in an effective manner is not possible. Incentives also encourage unethical behaviour. Organizations would benefit from using validated methods to hire top executives, reducing compensation, eliminating incentive plans, and strengthening stockholder governance related to the hiring and compensation of executives.

Pay Disparity, External Pay Alternatives and Turnover of the Second Best Paid Executive

March 18, 2014 Comments off

Pay Disparity, External Pay Alternatives and Turnover of the Second Best Paid Executive
Source: Social Science Research Network

We contribute to the intersection of top executive turnover and compensation research by investigating pay structure implications on turnover, focusing on the second best-paid executive as the one being closest to winning the tournament for the best-paid position. Building on tournament theory and using competing-risks survival regression, we develop and test hypotheses with regard to the effects of pay disparity among a firm’s top executives and external pay alternatives on the exit of the second best-paid executive. For a sample of S&P 500 firms in the 14-year period between 1993 and 2006, we find that comparisons with higher paid executives and external pay alternatives matter for individuals’ decisions whether to stay in or to leave a pay tournament, whereas comparisons to lower paid executives do not.

‘Can’t Get Enough’: Prejudice, Contact Jobs and the Racial Wage Gap in the US

March 18, 2014 Comments off

‘Can’t Get Enough’: Prejudice, Contact Jobs and the Racial Wage Gap in the US
Source: Institute for the Study of Labor

The wage gap between African-Americans and white Americans is substantial in the US and has slightly narrowed over the past 30 years. Today, blacks have almost achieved the same educational level as whites. There is reason to believe that discrimination driven by prejudice plays a part in explaining this residual wage gap. Whereas racial prejudice has substantially declined over the past 30 years, the wage differential has slightly converged overtime. This ‘prejudice puzzle’ raises other reasons in explaining the absence of convergence of this racial differential. In this paper, I assess the impact which of the boom of jobs in contact with customers has on blacks’ labor market earnings. I develop a search-matching model with bargaining to predict the negative impact which of the share of these contact jobs has on blacks’ earnings in the presence of customer discrimination. I test this model using the IPUMS, the General Social Survey and the Occupation Information Network. My estimates show that black men’s relative earnings are lower in areas where the proportions of prejudiced individuals and of contact jobs are high. I also estimate that the decreased exposure to racial prejudice is associated with a higher convergence of the residual gap, whereas the expansion of contact jobs partly explains the persistence of the gap.

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